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90–266 PDF 2004

S. HRG. 108–389

INDIAN MONEY ACCOUNT CLAIMS SATISFACTION

ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

ON

S. 1770

TO ESTABLISH A VOLUNTARY ALTERNATIVE CLAIMS RESOLUTION

PROCESS TO REACH A SETTLEMENT OF PENDING CLASS ACT ACTION

LITIGATION

OCTOBER 29, 2003

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

BEN NIGHTHORSE CAMPBELL, Colorado, Chairman

DANIEL K. INOUYE, Hawaii, Vice Chairman

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

PAUL MOOREHEAD, Majority Staff Director/Chief Counsel

PATRICIA M. ZELL, Minority Staff Director/Chief Counsel

(II)
(III)

C O N T E N T S

Page

S. 1770, text of ......................................................................................................... 3

Statements:

Akaka, Hon. Daniel K., U.S. Senator from Hawaii ....................................... 18

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, chairman,

Committee on Indian Affairs ....................................................................... 1

Cason, James, associate deputy secretary, Department of the Interior,

Washington, DC ............................................................................................ 19

Echohawk, John, executive director, Native American Rights Fund, Boulder, CO ........................................................................................................... 27

Gray, Jim, principal chief, Osage Tribal Council, Pawhuska, OK ............... 37

Hall, Tex, president, National Congress of American Indians, Washington, DC ........................................................................................................... 32

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, vice chairman, Committee on Indian Affairs ............................................................................... 17

Matt, Fred, chairman, Confederated Salish and Kootenai Tribes, Pablo,

MT .................................................................................................................. 34

Thomas, Hon. Craig, U.S. Senator from Wyoming ........................................ 18

Upton, Brian, legal department, Confederated Salish and Kootenai

Tribes, Pablo, MT .......................................................................................... 34

Waters, George ................................................................................................. 34

APPENDIX

Prepared statements:

Cason, James .................................................................................................... 44

Echohawk, John ................................................................................................ 52

Gray, Jim .......................................................................................................... 72

Hall, Tex ............................................................................................................ 63

Matt, Fred ......................................................................................................... 69

McCain, Hon. John, U.S. Senator from Arizona ............................................ 43

Additional material submitted for the record:

Position Statement of the Navajo Nation (with resolution) .......................... 75

(1)

INDIAN MONEY ACCOUNT CLAIMS

SATISFACTION ACT

WEDNESDAY, OCTOBER 29, 2003

U.S. SENATE,

COMMITTEE ON INDIAN AFFAIRS,

Washington, DC.

The committee met, pursuant to notice, at 10:20 a.m. in room

106, Dirksen Senate Building, the Hon. Ben Nighthorse Campbell

(chairman of the committee) presiding.

Present: Senators Campbell, Inouye, Thomas, and Akaka.

STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM COLORADO, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. The Committee on Indian Affairs will be in session.

Good morning. We are told that we will have a vote at 10:40 a.m.

We will go as far as we can, take a 10- or 15-minute break, and

then come back if we have not heard from all of the witnesses.

Eight long years have passed since the Cobell v. Norton case was

filed. To date, we have spent hundreds of millions of dollars on accountants and lawyers. No accounting has been done, and not one

penny has been paid to one Indian account holder. It is getting

worse.

On September 25, Judge Lamberth issued a 400-page decision

that guarantees at least 5 more years of litigation, billions more

dollars spent, and no end in sight to the lawsuit. With appeals,

Congressional squabbling over the money, and further lawsuits

aimed at securing money damages, the case is just beginning.

The Department claims that pennies on the dollar are owed to

the plaintiffs, but without billions more being spent on accounting

activity, the Department cannot say for sure how much is in the

accounts, or should be in the accounts. Preliminary cost estimates

from the Interior Department suggest that it will take $10 billion

more to comply with Judge Lamberth’s order on historic accounting. The money will be spent year-after-year through at least fiscal

year 2008.

Many of my colleagues and I believe this money is better spent

on reconstituting the Indian land base and building a forward-looking state-of-the-art trust management system and providing more

dollars to Indian health care, education, and many other things in

Indian country that are under funded.
2

The plaintiffs claim that more than $175 billion should be in

these accounts, a number that the Department vigorously contests.

Last night, the Interior Appropriations Conference approved a provision that will delay the accounting ordered by the judge until

Congress clarifies the obligations of the Department regarding an

accounting, or by December 31, 2004. This is a stopgap measure.

We were worried, obviously, in this Committee, that if that had

been done on a long-term basis, it might have, in fact, eroded the

jurisdiction of this committee to deal with it at all.

In my mind, that means that we have roughly 1 year to reach settlement on this matter. With Congress facing a $400-billion deficit next year, any settlement is still a long way from having the

money actually appropriated. As most people know, when you get

a judgment, it does not necessarily mean that you get the money

then. It might be years and years. There are a lot of Indian people

out there that need the money and have a right to the money.

Last week, along with Senators Inouye and Dominici, I introduced S. 1770, the Indian Money Account Claim Satisfaction Act of

2003, to reach a legislative settlement of the case. I look forward

to hearing from our witnesses this morning. I would hope that they

would offer some positive suggestions on how we bring this matter

to a close, and not simply dig their heels in and rehash many of

the old issues that we have dealt with over and over.

[Text of S. 1770 follows:]
3

1

II

108TH CONGRESS

1ST SESSION S. 1770

To establish a voluntary alternative claims resolution process to reach a

settlement of pending class action litigation.

IN THE SENATE OF THE UNITED STATES

OCTOBER 21, 2003

Mr. CAMPBELL (for himself, Mr. INOUYE, and Mr. DOMENICI) introduced the

following bill; which was read twice and referred to the Committee on Indian Affairs

A BILL

To establish a voluntary alternative claims resolution process

to reach a settlement of pending class action litigation.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Indian Money Account

5 Claim Satisfaction Act of 2003’’.

6 SEC. 2. FINDINGS; PURPOSE.

7 (a) FINDINGS.—Congress finds that—

8 (1) since the 19th century, the United States

9 has held Indian funds and resources in trust for the

10 benefit of Indians;
4

2

•S 1770 IS

1 (2) in 1996, a class action was brought against

2 the United States seeking a historical accounting of

3 balances of individual Indian money accounts;

4 (3) after 8 years of litigation and the expendi5 ture of hundreds of millions of dollars of Federal

6 funds, it is clear that the court-ordered historical ac7 counting will require significant additional resources

8 and years to accomplish and will not result in sig9 nificant benefits to the members of the class; and

10 (4) resolving the litigation in a full, fair, and

11 final manner will best serve the interests of the

12 members of the class and the United States.

13 (b) PURPOSE.—The purpose of this Act is to provide

14 a voluntary alternative claims process to reach settlement

15 of the class action litigation in Cobell v. Norton (No.

16 96cv01285, D.D.C.).

17 SEC. 3. DEFINITIONS.

18 In this Act:

19 (1) ACCOUNTING.—The term ‘‘accounting’’—

20 (A) with respect to funds in an individual

21 Indian money account that were deposited or

22 invested on or after the date of enactment of

23 the Act of June 24, 1938 as provided in the

24 first section of that Act (25 U.S.C. 162a),

25 means a demonstration, to the maximum extent
5

3

•S 1770 IS

1 practicable, of the monthly and annual balances

2 of funds in the individual Indian money ac3 count; and

4 (B) with respect to funds in an individual

5 Indian money account that were deposited or

6 invested between 1887 and the day before the

7 date of enactment of the Act of June 24, 1938,

8 means a demonstration of the probable balances

9 of funds in an individual Indian money account

10 that were deposited or invested.

11 (2) CLAIM.—

12 (A) IN GENERAL.—The term ‘‘claim’’

13 means a legal or equitable claim that has been

14 brought or could be brought, asserting any duty

15 claimed to be owed by the United States under

16 any statute, common law, or any other source

17 of law to an individual Indian money account

18 holder that pertains in any way to the account

19 holder’s account, including the duty to—

20 (i) collect and deposit funds in the ac21 count;

22 (ii) invest funds in the account;

23 (iii) make disbursements from the ac24 count;
6

4

•S 1770 IS

1 (iv) make and maintain records of ac2 tivity in the account;

3 (v) provide an accounting; and

4 (vi) value, compromise, resolve, or

5 otherwise dispose of claims relating to the

6 account.

7 (B) INCLUSION.—The term ‘‘claim’’ in8 cludes a claim for damages or other relief for

9 failure to perform, or for improper performance

10 of, any duty described in subparagraph (A).

11 (3) CLASS ACTION.—The term ‘‘class action’’

12 means the civil action Cobell v. Norton (No.

13 96cv01285, D.D.C.).

14 (4) DE MINIMIS INDIVIDUAL INDIAN MONEY AC15 COUNT.—The term ‘‘de minimis individual Indian

16 money account’’ means an individual Indian money

17 account that contains less than $100.

18 (5) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible

19 individual’’ means—

20 (A) a living individual who is or has been

21 an individual Indian money account holder, ex22 cept any such individual whose account holds or

23 held funds only from the distribution of a judg24 ment fund or a per capita distribution; and
7

5

•S 1770 IS

1 (B) the estate of a deceased individual

2 who—

3 (i) was living on the date of enact4 ment of the American Indian Trust Fund

5 Management Reform Act of 1994 (25

6 U.S.C. 4001 et seq.); and

7 (ii) held an individual Indian money

8 account on that date or at any time subse9 quent to that date, except any such indi10 vidual whose account holds or held funds

11 only from the distribution of a judgment

12 fund or a per capita distribution.

13 (6) IMACS TASK FORCE.—The term ‘‘IMACS

14 Task Force’’ means the Indian Money Account

15 Claim Satisfaction Task Force established by

16 section 4.

17 (7) INDIVIDUAL INDIAN MONEY ACCOUNT.—

18 The term ‘‘individual Indian money account’’ means

19 an account that contains funds held in trust by the

20 United States, established and managed by the

21 United States on behalf of an individual Indian.

22 (8) SECRETARY.—The term ‘‘Secretary’’ means

23 the Secretary of the Interior.
8

6

•S 1770 IS

1 (9) TRIBUNAL.—The term ‘‘Tribunal’’ means

2 the Indian Money Claims Tribunal established by

3 section 5.

4 SEC. 4. INDIAN MONEY ACCOUNT CLAIM SATISFACTION

5 TASK FORCE.

6 (a) ESTABLISHMENT.—There is established the In7 dian Money Account Claim Satisfaction Task Force.

8 (b) MEMBERSHIP.—

9 (1) IN GENERAL.—The IMACS Task Force

10 shall be comprised of not fewer than 9 members, ap11 pointed jointly by the majority leader and minority

12 leader of the Senate and the Speaker and minority

13 leader of the House of Representatives.

14 (2) QUALIFICATIONS.—

15 (A) BACKGROUND.—Members of the

16 IMACS Task Force shall be selected from pri17 vate enterprise and academia and shall not be

18 employees of the United States.

19 (B) EXPERTISE.—Of the members ap20 pointed to the IMACS Task Force—

21 (i) 2 shall have expertise in the field

22 of forensic accounting;

23 (ii) 2 shall have expertise in the field

24 of Federal Indian law;
9

7

•S 1770 IS

1 (iii) 2 shall have expertise in the field

2 of commercial trusts;

3 (iv) 1 shall have expertise in the field

4 of mineral resources;

5 (v) 1 shall have expertise in the field

6 of economic modeling and econometrics;

7 and

8 (vi) 1 shall have expertise in the field

9 of complex civil litigation.

10 (3) IMACS TASK FORCE LEADER.—An IMACS

11 Task Force Leader shall be chosen by majority vote

12 of the members of the IMACS Task Force.

13 (c) COMPENSATION AND TRAVEL EXPENSES.—A

14 member of the IMACS Task Force shall be entitled to—

15 (1) compensation, at a rate that does not ex16 ceed the daily equivalent of the annual rate of basic

17 pay prescribed under level V of the Executive Sched18 ule under section 5316 of title 5, United States

19 Code, for each day the member is engaged in the

20 performance of duties the IMACS Task Force; and

21 (2) travel expenses, including per diem in lieu

22 of subsistence, in the same manner as persons em23 ployed intermittently in Government service under

24 section 5703 of title 5, United States Code.
10

8

•S 1770 IS

1 (d) INFORMATION AND SUPPORT.—The Secretary of

2 the Interior shall provide the IMACS Task Force—

3 (1) access to all records and other information

4 in the possession of or available to the Secretary re5 lating to individual Indian money accounts; and

6 (2) such personnel, office space and other facili7 ties, equipment, and other administrative support as

8 the IMACS Task Force may reasonably request.

9 (e) CONFIDENTIAL INFORMATION.—Section 10(b) of

10 the Federal Advisory Committee Act (5 U.S.C. App.) shall

11 not apply to the IMACS Task Force.

12 (f) DUTIES.—

13 (1) IN GENERAL.—The IMACS Task Force

14 shall—

15 (A) not later than 1 year after the date of

16 enactment of this Act, complete an analysis of

17 records, data, and other historical information

18 with regard to the conduct of an historical ac19 counting submitted by the parties in the class

20 action to the district court in January 2003;

21 and

22 (B) not later than 60 days after complet23 ing the analysis under subparagraph (A), hold

24 meetings with representatives of—

25 (i) the plaintiffs in that civil action;
11

9

•S 1770 IS

1 (ii) the Department of Justice and the

2 Department of the Interior; and

3 (iii) any other parties that, in the dis4 cretion of the IMACS Task Force, are nec5 essary to allow the IMACS Task Force to

6 carry out its duties under this Act.

7 (2) ACCOUNT BALANCES.—

8 (A) METHODOLOGIES OR MODELS.—The

9 IMACS Task Force shall develop 1 or more ap10 propriate methodologies or models to conduct

11 an accounting of the individual Indian money

12 accounts.

13 (B) DETERMINATION.—Using methodolo14 gies or models developed under subparagraph

15 (A), the IMACS Task Force shall conduct an

16 accounting to determine in current dollars the

17 balances of—

18 (i) first, all individual Indian money

19 accounts opened in or after 1985;

20 (ii) second, all individual Indian

21 money accounts opened on or after the

22 date of enactment of the first section of

23 the Act of June 24, 1938 (25 U.S.C.

24 162a), and before 1985; and
12

10

•S 1770 IS

1 (iii) third, all individual Indian money

2 accounts opened before the date of enact3 ment of the first section of the Act of June

4 24, 1938 (25 U.S.C. 162a).

5 (C) NOTICE OF DETERMINATION.—On

6 making a determination of the balance in the

7 individual Indian money account of an eligible

8 individual, the IMACS Task Force shall provide

9 notice of the determination to the eligible indi10 vidual and the Secretary.

11 (g) ACCEPTANCE OR NONACCEPTANCE BY ELIGIBLE

12 INDIVIDUAL.—

13 (1) ACCEPTANCE.—If an eligible individual ac14 cepts the determination by the IMACS Task Force

15 of the balance in the individual Indian money ac16 count of the eligible individual—

17 (A) not later than 60 days after the date

18 on which the eligible individual receives notice

19 of the determination, the eligible individual

20 shall submit to the Secretary a notice that the

21 eligible individual accepts the determination of

22 the balance;

23 (B) not later than 30 days after the Sec24 retary receives the notice of acceptance under

25 subparagraph (A), the Secretary shall make any
13

11

•S 1770 IS

1 adjustment in the records of the Secretary to

2 reflect the determination;

3 (C) based on the adjustment made pursu4 ant to paragraph (B), the Secretary shall make

5 full payment to the eligible individual of the

6 balance in the individual Indian money account

7 of the eligible individual in satisfaction of any

8 claim that the individual may have;

9 (D) the eligible individual shall provide the

10 Secretary an accord and satisfaction of all

11 claims of the eligible individual, which shall be

12 binding on any heirs, transferees, or assigns of

13 the eligible individual; and

14 (E) the eligible individual shall be dis15 missed from the class action.

16 (2) NONACCEPTANCE.—If an eligible individual

17 does not accept the determination by the IMACS

18 Task Force of the balance in the individual Indian

19 money account of the eligible individual, the eligible

20 individual may—

21 (A) have the amount of the balance deter22 mined through arbitration by the Tribunal; or

23 (B) remain a member of the class in the

24 class action.
14

12

•S 1770 IS

1 SEC. 5. INDIAN MONEY CLAIMS TRIBUNAL.

2 (a) ESTABLISHMENT.—There is established the In3 dian Money Claims Tribunal.

4 (b) MEMBERSHIP.—The Tribunal shall be comprised

5 of 5 arbitrators drawn from the list of arbitrators main6 tained by the Attorney General.

7 (c) ELECTION TO ARBITRATE.—If an eligible individ8 ual elects to have the amount of the balance in the individ9 ual Indian money account determined through arbitration

10 by the Tribunal—

11 (1) not later than 60 days after receiving the

12 notice of determination under section 4(f)(2)(C), the

13 eligible individual shall submit to the Tribunal, in

14 such form as the Tribunal may require, all claims of

15 the eligible individual, with an agreement to be

16 bound by any determination made by the Tribunal;

17 and

18 (2) the United States shall be bound by any de19 termination made by the Tribunal.

20 (d) REPRESENTATION.—

21 (1) IN GENERAL.—An eligible individual may be

22 represented by an attorney or other representative in

23 proceedings before the Tribunal.

24 (2) ATTORNEY’S FEE.—No legal representative

25 retained by an eligible individual for purposes of

26 proceedings before the Tribunal may collect any fee,
15

13

•S 1770 IS

1 charge, or assessment that is greater than 25 per2 cent of the amount of the balance in the individual

3 Indian money account of the eligible individual de4 termined by the Tribunal.

5 (e) TIMING.—To the extent practicable, the Tribunal

6 shall—

7 (1) schedule any proceedings necessary to de8 termine a claim to occur not later than 180 days

9 after the date on which the eligible individual sub10 mits the claim; and

11 (2) make a determination of the claim, and pro12 vide the eligible individual and the Secretary notice

13 of the determination, not later than 30 days after

14 the conclusion of the proceedings.

15 (f) ACTION FOLLOWING DETERMINATION.—Not

16 later than 30 days after the Secretary receives the notice

17 of determination under subsection (e)(2)—

18 (1) the Secretary shall make any adjustment in

19 the records of the Secretary to reflect the determina20 tion;

21 (2) based on the adjustment made pursuant to

22 paragraph (1), the Secretary shall make full pay23 ment to the eligible individual of the balance in the

24 individual Indian money account of the eligible indi-
16

14

•S 1770 IS

1 vidual in satisfaction of any claim that the eligible

2 individual may have;

3 (3) the individual Indian money account of the

4 eligible individual shall be closed;

5 (4) the eligible individual shall provide the Sec6 retary an accord and satisfaction of all claims of the

7 eligible individual, which shall be binding on any

8 heirs, transferees, or assigns of the eligible individ9 ual; and

10 (5) the eligible individual shall be dismissed

11 from the class action.

12 SEC. 6. JUDGMENT FUND AVAILABILITY.

13 The funds for any payment made pursuant to section

14 4(g)(1)(C) or 5(f)(2) shall be derived from the permanent

15 judgment appropriation under section 1304 of title 31,

16 United States Code (commonly known as the ‘‘Judgment

17 Fund’’), without further appropriation.

18 SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

19 There are authorized to be appropriated—

20 (1) to carry out section 4, $10,000,000 for each

21 of fiscal years 2004 and 2005; and

22 (2) to carry out section 5, $10,000,000 for each

23 of fiscal years 2006 and 2007.

Æ
17

The CHAIRMAN. I would yield to my colleague, Senator Inouye.

Senator INOUYE. Thank you very much, Mr. Chairman.

STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM

HAWAII, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

Senator INOUYE. A few days ago, as you indicated, Mr. Chairman, the members of the Conference on the Interior Appropriations

agreed to a House proposal that we have been advised is of questionable constitutionality. The relevant language, as pointed out,

will prevent the provisions of the American Indian Trust Fund

Management Reform Act, the provisions of any other statute, or

any principle of common law from being construed or applied to require the Department of the Interior to commence or continue the

conduct of an historical accounting of individual Indian money accounts until the earlier of the following shall have occurred:

First, the Congress acts to amend the American Indian Trust

Fund Management Reform Act to, and I quote, ‘‘delineate the specific historical accounting obligations of the Department of the Interior with respect to the Individual Indian Money Trust,’’ or, second,

December 31, 2004.

As pointed out, Mr. Chairman, that puts this committee on the

spot. We do not mind that, but I think this is an unconstitutional

matter.

Since that time, our offices have been flooded with telephone

calls, faxes, and e-mails expressing the concerns of Indian country

that hundreds of thousands of Indian people have been denied

their rights to seek an accounting of the funds that are held in

trust for their benefit by the United States.

They ask me, and undoubtedly they are also asking other Senators who serve on this committee, whether any other group of

Americans—would be singled out in this manner for such treatment. Sadly, I believe we all know the answer to that question.

However, today we embark on a new path that will hopefully

lead us away from one of the sorriest episodes in my tenure of service in the Senate to a day when those who have been denied their

rights will have their rights vindicated. Those of us who have

joined the chairman in cosponsoring this measure know that it is

just a starting point, and that is why we are having this hearing

today, so that we may call upon the wisdom of those who would

be affected by this legislation.

On April 8 of this year, Chairman Campbell and I wrote to the

parties to the Cobell v. Norton class action lawsuit to explore their

interest in settlement of the litigation. Both parties replied that

they were amenable to settlement negotiations, and thereafter,

there was some discussion of mediation. Before we dismiss that

idea, I would like to make one small suggestion.

Often, when mediation is discussed, it usually entails an effort

to bring the parties to agreement over a monetary figure that

would resolve their differences. My suggestion would be that we

keep the concept of mediation on the table as we consider this

bill—only rather than have the parties enter into mediation over

money—we call upon the parties to enter into mediation as to

which methodology, or series of methodologies, should be applied to

the accounts that will bridge the gap that has been brought about
18

through the loss of critical information commonly considered necessary for a full accounting.

Then, as the parties have agreed they are capable of doing—that

is, coming to agreement—by the time the IMACS Task Force is

constituted, there will be one or more methodologies that have been

blessed by the parties to the litigation, and that the Task Force can

apply to each individual account, if an account holder elects to pursue that course of action.

Most importantly, I believe it is incumbent upon us to act—to act

deliberately but with speed—so that this national nightmare may

be brought to a close, and the first Americans of this land may

have access to the moneys that are rightfully theirs.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Inouye.

Senator Thomas.

STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM

WYOMING

Senator THOMAS. Very briefly, Mr. Chairman. Certainly we have

a problem before us. The Court has significantly increased the

scope of the accounting. The DOI must complete the accounting.

That would take decades longer and would cost of billions of dollars

more than was originally planned, I believe.

All of us are interested in a settlement that is fair to willing

plaintiffs. The Cobell case will continue for several years, if not

decades, the way it is. I certainly promote the notion that we continue to look at the legislation before this committee, to provide an

alternative. As one of the reservations allotted under the 1887

Dawes Act, the Wind River Reservation has thousands of individual Indian money account holders involved in this suit.

We are supportive of the concepts proposed in the legislation and

urge you to move forward.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you.

Senator Akaka, do you have any statement you would like to

make?

STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR FROM

HAWAII

Senator AKAKA. I want to thank you, Mr. Chairman, for this opportunity to make a statement. I want to thank you, Chairman

Campbell and Vice Chairman Inouye for this hearing today, and in

introducing S. 1770, the Indian Money Account Claims Satisfaction

Act of 2003.

In addition, I want to thank the witnesses who will testify before

the committee for their participation.

For decades, the United States has been trying to resolve the accounting problems for both the individual Indian money and Indian

tribal accounts. As a result, for 8 years now, litigants for individual

Indian money account holders who filed a lawsuit in 1996 against

then Secretary of the Interior, Bruce Babbitt, and now again Secretary of the Interior Gail Norton, have been waiting for an accurate and complete accounting of their individual trust accounts.
19

The historical accounting of the individual Indian money accounts still has not been rendered. With the September 25, 2003,

memorandum and order that was issued by Judge Lamberth providing specific requirements for the Department to address as it

completes it accounting by no later than 2007, the Department has

indicated that preliminary estimates to comply with the order will

cost somewhere between $10 billion and $12 billion.

Even though there is finally a deadline in which the Department

must complete its accounting of these individual accounts, but I am

still not certain that the Department will be able to fully comply

with Judge Lamberth’s memorandum and order.

Mr. Chairman, for this reason, I am pleased that you have introduced S. 1770 with Senators Inouye and Senator Dominici. While

I commend you for your efforts to bring forth this legislation to address the Government’s responsibility to provide an accurate and

complete accounting of the individual Indian money accounts, I

would like to ensure that this legislation does not impede the opportunities to mediate this matter.

I agree with the intent of S. 1770, and look forward to working

with you, Mr. Chairman, and the committee. Again, I want to say

thank you for holding this important hearing.

The CHAIRMAN. Thank you, Senator Akaka.

We will now start with our first witness, James Cason, associate

deputy secretary, Department of the Interior, Washington, DC.

Mr. Cason, please proceed.

STATEMENT OF JAMES CASON, ASSOCIATE DEPUTY SECRETARY, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

Mr. CASON. Thank you, Mr. Chairman. It is my pleasure to be

here again today talking about this very important issue. We have

had an opportunity to chat on this issue a couple of times in the

past. I appreciate another opportunity to do that.

We are here to talk about the historical accounting. Senators

have laid the ground work for the discussion. The problem has

been ongoing for quite some time. I just want to make a few points

before I answer questions.

Senator Akaka made a great point that I would like to illustrate.

This is the Government’s responsibility to address this issue. Often

we have the Department of the Interior being the root of the problem. We really are not. At the end of this, we have to recognize

that ultimately Congress set up the trust as the trustor. The Department of the Interior is the principal trustee delegate on behalf

of the Government. Congress, the executive branch, and the courts

all have a role to play in laying out how we address this issue.

This issue is not new. It has been ongoing for quite a long time.

The issue to do an accounting, obviously, is one that seems to have

been unresolved for a long time. If you take a look at where the

courts are right now, it says that our duty to account goes all the

way back to 1887. Therefore, we have not addressed this issue for

a long time.

Ultimately, all three branches of the Government are going to be

involved in this as we are right now. Ultimately, the Congress is

going to have to decide what will our trust responsibility be to settle this. That is what we are trying to decide. What exactly is an
20

accounting. Ultimately, Congress will have to decide how to pay for

it.

The Department of the Interior does not have any independent

funding to address this. Ultimately the bill comes here. We have

to decide that nexus point of how much work do we do to address

an accounting, and how much are we willing to pay for it? That is

the struggle that we are going through right now.

The court is principally addressing the issue of what do we have

to do to do an accounting. Congress is struggling with both points

of what do we do and how do we pay for it. The Department of the

Interior is trying to do the same.

Ultimately we get back to the initial point of this, and that is the

1994 act. In the 1994 act, the provision that is in question is section 102 of that act which basically says:

The Secretary shall account for the daily and annual balance of all funds held in

trust by the United States for the benefit of the Indian tribe or the individual Indian which are deposited and invested pursuant to the Act of June 24, 1938.

That is the language that is in question. It does not say anything

about doing a historical accounting. It does not say go back to 1887.

The legislative history does not say any of that. But we are where

we are. The court has interpreted that what our responsibility is

to satisfy this language—and if this language is not enough—then

it is any other common law responsibility that we might have.

Then we have to go back to 1887 and reconstruct the history of the

Indian trust since 1887.

Ultimately the three branches of Government are going to have

to decide whether that, in fact, is the task that we have to do, and

how we would go about approaching that task. Certainly in this

language here, if this is the root of our responsibility, then one

could think that funds invested pursuant to the 1938 act, maybe

1887 is a far way back. Ultimately Congress can make that decision, too.

We need to get down to a point of being clear about what our

accounting duty is and that the Department of the Interior needs

to follow, and what are the parameters of that duty. Then we need

to be clear of how we are going to fund the administrative process

to undertake that accounting. We need also to be clear how we deal

with the results.

The litigation has been going on since 1996. That is a long time.

This issue does need to be resolved. So far in the Department of

the Interior we have spent $53 million on this issue. It has not

been hundreds of millions or billions yet, but it could get there. We

have spent $53 million trying to undertake an historical accounting.

In the past what we have done is historical accounting on the

named plaintiffs. This is an accounting for funds that have been

placed in their accounts. What we have found through that process

for the named plaintiffs is one check for $60 that went to the

wrong place. We have spent $20 million getting there.

Let me be fair. Looking just that far is not statistically relevant.

There is a big field of accounts that are there. That would not be

statistically relevant. That is what we have found. We have also

done about 17,000 judgment per capita accounts. The error rate we

find there is nominal.
21

Unrelated in a past exercise we have also done tribal accounting.

What we have found in the tribal accounting process is an error

rate that was very low. But again, it is not complete. There is more

work that could be done. There is a lot of history there. We could

do more work.

The issue is: How much more work do we do? Exactly what kind

of work do we do?

The plaintiffs believe that we owe, if the press accounts are accurate, $176 billion. There is a long way between where the Department of the Interior is and where the plaintiffs are. I think Senator

Inouye’s point that maybe what we need to do is take a look at the

methodologies. That is probably a good idea. Take a look at the

methodologies of exactly what we need to do to resolve this issue.

When we went to court for trial 1.5, there were two dramatically

different methodologies presented to the court. The methodology

that the Department chose was an accounting for funds with a statistical verification process of the documentation in order to contain

costs.

The plan that we offered to the court cost approximately $335

million. We sought funding in the 2004 appropriations process to

fund that. That was a total of about $100 million for fiscal year

2004 to undertake the accounting in our plan. It looks like our appropriations will be about $45 million. Congress is unwilling to

fund that plan, or has been unwilling to fund that plan.

On the other hand, the plan that the court gave us was a very

broad accounting, going back to 1887, to account for every account

that has ever been, and account for all the land transactions for

every allotment that has ever been, in essence. That plan is estimated to cost billions. If we cannot get $100 million to do the accounting that we are looking for, I think it is harder to believe that

we will get billions to do the plan that the court has asked for. But

that is what the court has told us to do. We definitely have an

issue there that somehow we need to bring to resolution.

The key features of the court plan that is different than ours basically are: Who gets an accounting? We basically had the individuals who had accounts that were open as of the date of the 1994

act. The court has basically said that anyone who has ever had an

IIM account is part of the class. How far back do we go? Our accounting was back to 1938 for the individuals that were in our

pool. The court goes back to 1887 for anyone who has ever had an

account.

The court added lands requiring DOI to do an accounting for all

land allotments and all their fractionated interests. The Department had not planned to do that. We believe that the litigation was

about funds. The court has directed us to go after third party

records in order to do the accounting. We would be out, under this

plan, seeking records from third parties like individual Indians or

tribes, or oil, gas, or timber companies. The cost is dramatically different. Our plan was about $335 million over 5 years. The court’s

plan is in the billions in order to get it done. It has about the same

type of timeframe. The risk of implementation is substantially

higher with the court’s plan because of the huge acceleration of

work that would have to be done in a very short timeframe.
22

I want to applaud the committee in its leadership in introducing

S. 1770. It is nice to see that the authorizing committees both in

the Senate and in the House are actively engaged in the issue.

Clearly this is needed. I would suggest that S. 1770, in our opinion,

does not solve the problem because it offers a number of other alternatives on top of the accounting that we are looking at.

Certainly it has the advantage of giving choice to the Indian community, but it does not move us any closer to resolution of the

issues. It has the same fundamental problem that we have right

now which is getting adequate funding to do whatever accounting

is required to meet our trust responsibilities. That is not addressed.

We would be happy to work with the committee in addressing

some of the mechanics of making S. 1770 work.

Mr. Chairman, you made an opening statement in introducing

the bill that what we wanted was a full, fair, and final resolution

of this issue. I could not agree more that that is what we need. I

would like to add one other comment about fractionation, a fourth

‘‘F.’’ You had made a comment about fractionation. That is clearly

an area that is a material problem that needs to be addressed. It

is the root of a number of the problems that we have in administering this trust. We would certainly like to work with the committee

in coming up with concrete ways to solve that problem as well.

With that, thank you. I would ask that my statement be included

in the record in its entirety.

Thank you.

The CHAIRMAN. Without objection, so ordered.

[Prepared statement of James Cason appears in appendix.]

The CHAIRMAN. Thank you.

If S. 1770 does not solve the problem, I would ask you what does

solve the problem? Giving more money does not seem to work. You

mentioned yourself that we are far short of getting the amount that

you need in the appropriations process. That is not going to change.

We have a big deficit here. Senator Inouye and I, and I think most

of the people on the committee here, have always supported as

much as we can to go to Interior for any program, including trying

to resolve this accounting mess.

But we are 2 out of 100 on our side of the Hill. There are a whole

bunch more on the other side of the Hill that have other priorities.

If we just keep going at the rate we are now, you are not ever going

to get the amount of money needed to do the accounting without

changing the basic methodology.

Let me ask you a couple of questions before I turn it over to Senator Inouye.

What is the estimated cost for complying with the order only for

activities to be conducted in 2004? Do you know that?

Mr. CASON. Yes; in order to comply with the order and the timeframes in the order, our best estimate is approximately $3 billion.

The CHAIRMAN. $3 billion. Do you have a formal written estimate

of that cost?

Mr. CASON. Yes.

The CHAIRMAN. As you know, we had that rider put on the appropriation bill yesterday. I have the feeling that very frankly that

part of that was driven by the Administration. They did not do it
23

through me or Senator Inouye. But that was the impression I had

from hearing the dialog.

Is it the Department’s strategy to insert language in the appropriations bill to make this problem go away? In other words, was

the Department behind that movement in the Appropriations Committee?

Mr. CASON. Mr. Chairman, as I understand it, the Department

was not behind the efforts. I could not attest to who specifically

ramrodded the effort. As I understand it, it began with the Appropriations Committee. I had not seen the language until yesterday.

I do not know who drafted it and who shepherded it.

The CHAIRMAN. You said that on occasion that the Department

of the Interior is open to reasonable settlement discussions. I guess

that is still the case; is it not?

Mr. CASON. Yes.

The CHAIRMAN. We would be here all day, I suppose, if we tried

to get you to explain what is a reasonable settlement discussion.

Can you tell me in a nutshell what you call a ‘‘reasonable settlement discussion’’ when we are between $10 billion and $175 billion

poles?

Mr. CASON. Mr. Chairman, I think at this point the Department

of the Interior would love to settle this issue. We are consuming

a ton of resources, senior management time, and lower staff time

addressing this. We would love to see it be resolved so that we can

begin the healing process with the Indian community for which we

are the trustee. We would love to have this behind us.

Ultimately what it takes, I think, to get it behind us is to sit

down and have some concrete understanding about what exactly it

is we are trying to solve, and that we introduce fact over fiction

into the process so that we are solving some concrete issue. Basically what we have is an amalgam over time of hundreds of thousands of accounts that are alleged to have been improperly kept.

At this point we do not have the facts to be able to say, ‘‘Yes,

that is true,’’ or, ‘‘No, that is not true,’’ and to what degree. We do

not know what exactly we are solving in trying to address the issue

other than just doing an accounting to get all the facts.

If we are going to sit down and do a settlement, obviously there

is a cost avoidance issue and an opportunity cost that could be a

parameter for dealing with this. I think that is part of the reason

we have a complicated accounting prescription here so that there

is a good parameter at one end. Certainly there is $176 billion at

the other end. We would have to sit down and try to make a fact

over fiction settlement.

The CHAIRMAN. Well, you may never get the facts. Very clearly,

we all know there are so missing documents. I do not think it is

possible to get all the facts, in my view.

In his written testimony, the plaintiff’s lawyer, John Echohawk,

indicated that the plaintiffs are willing to engage in mediation as

an alternative method of resolving issues on Cobell. Has the Department ruled that out as a ‘‘reasonable settlement discussion?’’

Mr. CASON. No; we have not.

The CHAIRMAN. So I take it that your Department is willing to

talk about some mediation efforts?

Mr. CASON. Yes.
24

The CHAIRMAN. Maybe my last question is: Are you willing to sit

down with staff and try to work with the plaintiffs through staff

to try to find a method of mediating it?

Mr. CASON. Yes; we are, Mr. Chairman.

The CHAIRMAN. Okay.

Senator Inouye, do you have any questions?

Senator INOUYE. Thank you, Mr. Chairman.

I was just intrigued by your testimony this morning in which you estimated that the cost of an historical accounting would be $335

million; am I correct?

Mr. CASON. Yes.

Senator INOUYE. But yet in July 2002, in earlier testimony you

estimated that it would be $2.4 billion. What has happened in the

past year to alter your estimate?

Mr. CASON. The accounting is basically an element of what it is

you want to accomplish and how much work you put into it. At one

end of the spectrum I think the Court has pretty well laid out the

very end of one parameter which is do essentially everything back

to 1887; reconstruct every single account as far back as they go to

1887; reconstruct all land ownership and every allotment back to

1887 and all the relationships of all the Indians involved since

1887. That is one end of the spectrum.

At this end of the spectrum, you could make decisions about who

you are going to do an accounting for. Our plan was basically do

the accounting for the individuals who actually had open accounts

in 1994 when the act passed. The court’s plan said do it for everybody who ever had an account since 1887.

So you cutoff work there that you do not do if you are not addressing deceased individuals or closed accounts in the past. You

can do statistical work verifying accounts. Basically what we are

saying there is if I had a transaction in 1945 where I received $10

of leasing income, then I could either sample that and go get the

documentation on it, or as a statistical approach, I take 1 out of

every 1,000 samples, 1 out of every 5,000 samples, and if I can use

statistical techniques, I can cut the work down substantially and

still end up with a very high degree of accuracy as to what the results are.

In our plan we used statistical verification to say that we would

go after a certain set of the documentation to support the transactions on the ledger to a degree of 99 percent accuracy that we

would be within the error rate identified in the process.

We were able to cut down a substantial amount of work of not

going to get documentation for every single transaction that has occurred, but get a statistical set of the transaction documentation.

That would cut the work down. So we were able to get down to a

manageable, within the budget and the work load, type of approach

that would still give accurate results in the process.

Senator INOUYE. Has that methodology ever been employed by

the Government?

Mr. CASON. By the Government?

Senator INOUYE. Yes.

Mr. CASON. I am not sure, Senator, whether it has been employed by the Government. But the way we developed the methodology was that we had a statistical firm with a Ph.D. statistician
25

come assist the Department in designing the sample sizes. They

were designed to give a 99-percent accuracy. We basically employed

two times as many samples as were needed to get to that point.

We also added in another process that if we actually identified errors that we would sit and explore that pocket of errors until we

could get them resolved.

So we put in a process to get a reasonably high degree of accuracy of 99 percent to identify whatever the error rate was, whether

it was one-half percent or 10 percent, that would not require us to

do every transaction.

Ultimately, Senator, the cost on this is driven by how much work

we have to do to get to the bottomline. In our plan, we were basically going to end up sampling around one-half of a million transactions in order to do the accounting. In the judge’s plan, we would

have to go do the documentation for about 61 million transactions.

That is where the principal cost differences are.

Senator INOUYE. I am pleased to note in your testimony that you

would not be against the mediation process. I think that is a good

start for us. As indicated by you, there are countless numbers of

different methodologies. Do you not think it would be well if we can

sit down and be able to come to some mediated consensus as to

what methodology to follow?

Mr. CASON. Senator, I think that would be a wonderful thing if

we could sit down and come to an agreement about how to resolve

this.

Senator INOUYE. Could that be done legislatively or just administratively?

Mr. CASON. I think it could be either.

Senator INOUYE. Well, I feel better now.

Mr. CASON. Well, great.

Senator INOUYE. You have indicated a concern about the lack of

clarity in S. 1770. I, for one, would be most pleased to have your

staff provide us with language that would address this concern and

thereby bring about greater clarity in the bill.

Mr. CASON. We would be happy to do that.

Senator INOUYE. Thank very much, sir.

The CHAIRMAN. Without objection, so ordered.

Senator INOUYE. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, too, James. S. 1770 is certainly not

a perfect bill. Very few of them are around here. In fact, I have

never seen one yet that is happily supported by everybody involved.

There are no perfect bills. It is a vehicle, as I mentioned earlier.

We, very simply, need the Department of the Interior’s help, as we

need plaintiffs help, to bring this thing to closure. We just cannot

find a solution by ourselves. Hopefully you are going to work with

us, as you mentioned, with our staff.

Mr. CASON. We would be happy to. The only thing I would suggest, Senator, is that choice is great. But what we would like to do

is to see if we could get down to ‘‘Let us choose this path,’’ or, ‘‘Let

us choose this path,’’ or, ‘‘Let us choose this path,’’ as opposed to

trying to pursue multiple paths all at once.

The CHAIRMAN. That may work. Sometimes the same path does

not fit all moccasins.

Mr. CASON. That is true.
26

The CHAIRMAN. Thank you.

Senator Thomas, do you have any questions?

Senator THOMAS. Thank you, Mr. Chairman.

You talked about mediation. With whom would you sit down?

Mr. CASON. Well, if we were going to do mediation, I think it is

basically the Department of Interior, the Department of Justice,

the plaintiffs, and some third party mediators. Certainly since the

bill ultimately ends up with Congress in some fashion, or if we can

do it as litigation settlement, and possibly someone from Congress

who has the ability to actually settle involved in the process.

Senator THOMAS. If it were not for the court’s intervention, would

you have a process that works in the Department?

Mr. CASON. With regard to what, Senator?

Senator THOMAS. With regard to solving this issue.

Mr. CASON. I would say candidly probably no, because I do not

think that the plaintiffs and we are close enough that we would

end up agreeing mutually without some third party involved.

Senator THOMAS. So the court is an important component of this

resolution; do you think?

Mr. CASON. I think there is a role to play for all three branches

of Government, and in this case, all three branches are actively engaged. Now that we are actively engaged, the problem that we

have is that we are not engaged in a similar way.

Senator THOMAS. Well, you know, as you listen here—we have

been at this for 10 years—you are talking about methodology.

Mr. CASON. Yes.

Senator THOMAS. You do not have a methodology in mind after

10 years?

Mr. CASON. Well, actually we do, Senator. The Department has

an accounting plan. The Department has actively engaged in implementing our plan. We were funded in 2003 to do it. We have substantial accomplishments under our plan.

However, what the court has said is, ‘‘Your plan is insufficient.

We want you to do our plan.’’ The difference is that their plan costs

billions of dollars more. Congress is unwilling to fund our plan,

much less what the court has. So that is the problem that we are

in.

Senator THOMAS. I understand.

Mr. CASON. We do have a plan. We know where we want to go.

We think that we are approaching the accounting obligation in a

cost effective way that will also meet our trust responsibilities and

do it with a high degree of accuracy. But the court perceives that

we have to have a much broader, more expensive plan. That is why

we are here. We need to get that resolved.

Senator THOMAS. If the Congress agreed with you on the plan

and instituted it in the bills and then defended it in the court,

would we be successful?

Mr. CASON. I believe so. Ultimately it is Congress’ choice as the

trustor, the settlor of the trust, to tell all of us what our obligations

are to the trust. We do that through the statute. If Congress chooses to say:

What we meant in this language in the 1994 Act, or what we meant in previous

language that has become common law is this, then this is how we want the accounting to be.
27

If Congress tells the Department of the Interior, ‘‘What the court

told you to do is exactly what we meant. We are going to fund it

for $10 billion.’’ Okay, great. The Department will charge off and

go do the work that we are supposed to do. But if Congress is not

willing to fund that kind of approach, and that is not what Congress meant, and Congress meant something else, then we need to

be clear about what that is so that we, the Department, can fulfill

our trust responsibilities as prudently as we can, and that we have

a solution that Congress is willing to support with the funding to

implement it. So, yes.

Senator THOMAS. Thank you.

Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Cason, thank you for appearing today.

With that, we will take a 10-minute break to vote.

[Recess taken.]

The CHAIRMAN. The committee will come to order.

We have a conflict. We are dealing with the supplemental for

Iraq, Afghanistan, and the war effort. Senator Inouye had to go to

that meeting. He will not be with us for the rest of that testimony.

He may submit some questions in writing.

Our second panel is John Echohawk, executive director, Native

American Rights Fund, Boulder, CO.

John, welcome. Please proceed.

STATEMENT OF JOHN ECHOHAWK, EXECUTIVE DIRECTOR,

NATIVE AMERICAN RIGHTS FUND, BOULDER, CO

Mr. ECHOHAWK. Thank you, Mr. Chairman.

I am very pleased to see the interest in the committee in addressing these trust fund mismanagement problems. I am very

pleased to be invited to participate here in this hearing today.

As you know, the Native American Rights Fund is co-counsel for

the 500,000 current and past individual Indian money account

holders. We have been involved in this litigation since 1996 on a

class action basis.

In April, Mr. Chairman, you and the vice chairman sent us a letter that also went to the Secretary suggesting a mediated resolution of this case. We responded positively to that letter in May indicating that we were willing to engage in mediation. Of course, we

repeated that pledge in the hearing that the committee had on that

proposal in July. We had not heard an official Government response whether they were willing to participate in an attempt to

settle the case through mediation until this morning. I was very

pleased to hear Mr. Cason say that the Department would be willing to engage in an effort to resolve this case through mediation.

I think that is a very positive development.

I think what has happened since we had the hearing in July

when we started talking about mediation has been very significant.

Judge Lamberth’s decision of September 25 was basically holding

that the Government’s responsibility is to do the full historical accounting back to 1887. This is based upon the legal obligations that

the U.S. Government has undertaken under the trust responsibility.

This is rejecting the efforts by Interior and the arguments they

made to try to limit that full historical accounting. Both the Dis-
28

trict Court and the Court of Appeals have held this is required

under the Federal Government’s trust responsibility, under the

1994 act, which, of course, the courts have upheld. This has basically codified the Federal Government’s trust responsibility in

terms that require them to act as any normal trustee in any regular trust.

That has led the Department to talk about how much that would

cost. As we have discussed here this morning, I think that is all

the more reason why we should think about a mediated resolution

of this case.

I know the efforts of this committee to try to resolve this issue

and that S. 1770 has been introduced. We commend the committee

for its interest there. We believe that the goals of the resolution

process should include certain criteria that I have laid out in my

written testimony, including that the proposal be fair, that it expedite rather than delay resolution of the case, that it not be a forum

to re-litigate settled issues—issues that have already been determined by the District Court and the Court of Appeals, and that the

proposal be consistent with trust law—which again is what the

courts have held—is required in this situation; and the proposal

must be constitutional.

We understand that S. 1770 is a starting point by the chairman

and others who sponsored it to try to reach a resolution in this

case. We feel as though it is only a starting point. It has many defects contained within the bill that leads us to think that it is not

really a good bill and we should not go down that avenue. My written testimony contains three pages of problems that we see included in the current language in S. 1770. I will not repeat all of

that here.

I would just conclude once again by emphasizing the importance

of the mediation. We feel that is very possible to end the litigation.

It has come out that the Cobell plaintiffs and the Federal Government both agree that since the IIM accounts were started in 1887,

approximately $13 billion has gone into those accounts. We both

agree on that. In our view, that should be the start of this mediation and settlement process.

The next step is simply to ask the Government to produce its

records on how much of that $13 billion has been dispersed. How

much can they prove they paid out? Whatever is the difference is

what is owed, plus the interest on that money. It seems to us a

pretty straightforward process that would eliminate these requests

for $10 billion or so for some historical accounting which cannot be

done.

I do not believe the Department thinks it can be done. I think

they have admitted as much in court. I think they wanted to try

to put all kinds of parameters around it to be able to perform what

they would call an accounting that would basically just take into

account the records that it does have. But they do not have very

many records. Of course, the court rejected their plan out of hand

because it is not consistent with trust law. It is not consistent with

the 1994 act and the obligations that the Federal Government has

undertaken.

In summary, I think we can hopefully take the Administration

at its word and start these discussions about a mediated settlement
29

along the lines that I just suggested. If the Government wants to

try to re-litigate everything that we have litigated in the last 7

years in that mediation, we are not going to get very far at all. But

if we can start where are now in terms of what the courts have

ruled, I think we can resolve this case.

Thank you, Mr. Chairman. I would ask that my statement be included in the record in its entirety.

[Prepared statement of John Echohawk appears in appendix.]

The CHAIRMAN. Thank you.

In your written testimony you were quoting from an April 2003

letter that Senator Inouye and I sent to you and the Federal defendants, but you quoted only a small part of it. Let me read the

whole thing:

We believe that the most effective and equitable way to resolve this threshold

matter, that is, the accounting, is to engage the services of an enhanced mediation

team that will bring to bear trust accounting and legal expertise to develop alternative models that will resolve the Cobell case fairly and honorably for all parties.

Yet, as I understand your testimony, S. 1770 is totally out of the

blue. What we did with S. 1770 is really mirror what that letter

said that we had sent to you. Tell me where the disparity is.

Mr. ECHOHAWK. Mr. Chairman, I think if we were able to start

a mediation process, that the panel idea that you have included in

S. 1770 may well be something that could help us sort through this

process that I outlined in my statement. I think that is a good concept.

The CHAIRMAN. Okay. Normally when a client has an attorney

they can discuss things when they make a decision. This one is a

little difficult. As the counsel for the individual holders, I understand there are about 500,000 in this class action. How often do

you communicate with all 500,000?

Mr. ECHOHAWK. Well, as you might guess, that is a little difficult

to do. We go to as many meetings as we can, as requested by individual account holders. Of course, basically we have a small team.

But we do the best we can between the named plaintiffs and the

plaintiffs’ counsel.

The CHAIRMAN. Well, when you are having these meetings, I do

not know if you are hearing the same thing we are hearing. But

when we talk with Indian people, they would rather have some

measure of immediate relief than take a chance of waiting 5 years

or 10 years and going through all the court room gymnastics that

we have been going through over the past 8 years, and maybe another 10 years in the process.

Nine out of ten are saying they want to settle the thing, they

want to settle it now, and they want immediate relief. Are you not

hearing that?

Mr. ECHOHAWK. I think we are hearing that, too, but at the same

time it has to be a fair settlement. It has to be a fair settlement.

That is what we are proposing.

The CHAIRMAN. That is what the mediation team would be all

about, is trying to find some equitable settlement that would be accepted by the plaintiffs and by the Department, too.

Are you under any obligation to communicate with all of the

plaintiffs? Do you just call a meeting and invite whoever wants to

come to it? How do you do that?
30

Mr. ECHOHAWK. We do the best we can, Mr. Chairman. These

problems are inherent in a class action, and that is why the class

action approach is undertaken. In the end, of course, there are due

process safeguards in any settlement that would be reached. We

would, of course, have that approved by the court with all the due

process safeguards that are inherent in that class action process.

The CHAIRMAN. There has been some talk today about what kind

of methodology should be used to conduct an historical accounting.

I think that is a very important concern to the plaintiffs. As the

plaintiffs’ lawyer, would you oppose any methodology that would

substantially understate the true balances of your clients IIM accounts? I assume you would.

Mr. ECHOHAWK. Substantially understate? No, I do not believe

we would, Mr. Chairman. Again, I think we are looking to the decisions by the District Court and the Court of Appeals in terms of

what is a fair methodology and what is required in terms of an accounting. I think that shows us the way to go.

The CHAIRMAN. If the Committee were to adopt legislation calling for some sort of mediated settlement, would you agree that the

ultimate goal of the legislation would be to come up with a settlement that reflects the true balances of your clients IIM accounts,

the true balances?

Mr. ECHOHAWK. Yes; Mr. Chairman.

The CHAIRMAN. The true balances might not be what your plaintiffs now claim and they might not be what the Interior Department claims. If we did have a methodology that was pretty foolproof and it was not anywhere near what the original number was

of $176 billion, and yet it was not the same as the Department is

claiming, would that methodology receive your support?

Mr. ECHOHAWK. Well, Mr. Chairman, again it would have to be

consistent with trust law as determined by the District Court and

the Court of Appeals.

The CHAIRMAN. Let me ask you the same thing I asked the Department of the Interior. Are you willing to commit to some substantial time and resources to work with Senator Inouye and my

senior staff, in a good faith effort, to try to produce some sort of

settlement legislation that is equitable to both sides of the issue?

Mr. ECHOHAWK. We certainly would, Mr. Chairman. I think with

your help and with the help of the vice chairman and other members of the committee, we can get this done.

The CHAIRMAN. I think so, too, but it has to be a good faith effort

by the Department and by the attorneys for the plaintiffs, too.

I have no further questions. Senator Thomas, do you have any

comments or questions?

Senator THOMAS. Thank you, Mr. Chairman.

I am sorry I did not hear all of your testimony. I did read some

of it. If you were in charge of the world, would you have the Congress appropriate billions of dollars for accounting now?

Mr. ECHOHAWK. No, sir; I would not. I think through a mediated

process we can come up with a settlement to this case that would

eliminate the necessity to do that. I think doing the full historical

accounting is impossible to do. I think the Interior Department has

admitted as much.
31

If it cannot be physically done, I do not know why all these billions should be appropriated to do that. We should sit down and

figure out what we do in lieu of that. It just cannot be done.

Senator THOMAS. Well, is not the result of the Cobell case requiring that kind of thing?

Mr. ECHOHAWK. That is the requirement. But again if the Government cannot do that, then we need to figure out some other way

to do that. Again, if we work together, I think we could find a way.

Senator THOMAS. I would hope so. It seems like the Indian people in my State are more interested in a settlement. It does not appear that the attorneys or the plaintiffs over these years have been

very interested in doing anything except what they want to do in

the lawsuit.

Mr. ECHOHAWK. Well, as we pointed out in our letter to the

chairman and the vice chairman suggesting a mediated resolution

that we sent up in May, we are willing to engage in a process to

talk about mediation and settlement.

On several occasions since 1996 when we started the litigation,

we have attempted to do that with the Federal Government, but

none of those attempts have been fruitful.

Senator THOMAS. Fruitful depends upon which point of view;

does it not?

Mr. ECHOHAWK. Well, it has not achieved a settlement.

Senator THOMAS. Absolutely.

Mr. ECHOHAWK. My point is that we have been willing to talk.

Senator THOMAS. You have been willing to change your position

some?

Mr. ECHOHAWK. We are willing to talk, yes.

Senator THOMAS. That is not the answer to my question.

Mr. ECHOHAWK. Again, in a negotiation, it is a give-and-take

process.

Senator THOMAS. That is right, but sometimes it requires

changes on the part of all of the parties.

Mr. ECHOHAWK. Then yes, maybe we can change some of our positions as well, depending on what the trade-offs are. That is the

nature of negotiations.

Senator THOMAS. Thank you.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, John. I appreciate your being here.

Let me just reiterate, as I did for Mr. Cason, what happened in

the Appropriations Committee yesterday was not particularly satisfying to me or to Senator Inouye. We have a year before I think

something that is going to be really unacceptable happens to this

committee, to the plaintiffs, and maybe to Interior, too. I think

there is going to be a move to take it away from us and put it in

an appropriations bill which is going to really complicate it.

There probably will be further court challenges to that. It will

just go on and on. We have a year to get this thing done. If we do

not, we are going to be in some pretty deep stuff around here. So

I hope you are going to be serious about working with us and with

the Committee as we are going to try to make sure that the Interior is going to, also.

Mr. ECHOHAWK. We certainly are, Senator.

The CHAIRMAN. Thank you very much.
32

The last panel will be Tex Hall, president, National Congress of

American Indians, Washington, DC; Fred Matt, chairman, Confederated Salish and Kootenai Tribes, Pablo, MT; and Jim Gray, principal chief, Osage Tribal Council, Pawhuska, OK.

I have a 12:30 p.m. commitment that I cannot get out of, so I

would appreciate keeping this to 15 minutes per person.

Tex, please proceed.

STATEMENT OF TEX HALL, PRESIDENT, NATIONAL CONGRESS

OF AMERICAN INDIANS, WASHINGTON, DC

Mr. HALL. I will be as brief as I possibly can.

Senator Campbell, Senator Thomas, and members of the committee, thank you for the opportunity to testify today on S. 1770 on

behalf of member tribes and individuals of the National Congress

of American Indians. I would like to express our appreciation of the

committee for its commitment to this issue and to Indian people.

I believe this legislation can be viewed in two ways. If this is considered as an immediate legislative proposal that would be quickly

passed by Congress, then we have a great deal of concern, as we

all know. This bill would give the Federal Government the ability

to pick the panel of experts who would decide how much money the

Federal Government owes. Indian people simply could not trust a

proposal as drafted like that.

However, we believe the bill can be viewed as an effort to put

forward some serious concepts for settlement and to create discussions that will push settlement forward. In that light, we welcome

the bill because it could serve as a vehicle for Congress to establish

a fair and equitable process for settling the Cobell v. Norton litigation.

As you know, tribal leaders have supported the goals of the

Cobell plaintiffs and seek a correct trust funds accounting. At the

same time, tribes are concerned about the impacts of the litigation

on the capacity of the United States to deliver services to tribal Indian communities and nations, and to support the government-togovernment relationship.

We believe it is in the best interest of tribes and individual Indian account holders that tribal leaders participate in the resolution of trust related claims and the development of an effective system for management of the trust assets.

On July 1 we testified before this committee on Cobell v. Norton

settlement options. At that time NCAI set forth a set of principles

for how a settlement process should be structured. Today we will

respond to S. 1770 in light of those principles from our earlier testimony.

First of all, tribal leaders are impatient for Congress to put forward a serious settlement proposal. We are very appreciative of

this. They really do not care about the process so much as they

care about a serious signal from Congress that is willing to shoulder the costs of settling a lawsuit, and that these costs will not be

taken from existing Indian programs.

Second, tribal leaders have seen a lot of quick fixes in trust reform. S. 1770 feels a little bit like another quick fix. A real solution

is going to require that all parties come to an agreement. That in-
33

cludes the Department of the Interior, BIA, the Congress, and the

tribes.

Third, as we look to settle the historical accounting, Congress

should also address the problem of fractionation through land purchases as part of the settlement and support a state-of-the-art trust

management system and standards so that these problems do not

reoccur in the future.

In our written testimony we have outlined settlement process

principles which tribal leadership developed earlier this summer. I

have kept my oral remarks brief, but please refer to my written

testimony. My main statement is: We need to begin a settlement

process now.

We also support the mediation. I urge again all the parties, with

support from the Congress and from this committee, to sit down

and begin these discussions in the very near future.

Indian country cannot afford another appropriations cycle to

begin without action to begin a settlement process. We are very

concerned about the appropriation rider that was introduced.

Again, that is not the way we should be conducting business. It

should come before the appropriate authorizing committee, like this

one here.

We thank Senator Campbell, Senator Inouye, and Senator

Dominici for the introduction of S. 1770. I appreciate your leadership in putting this bill forward to push serious discussions to address this very important issue. This is the number one issue in

Indian country right now of fixing the trust and settling the trust.

Please consider our recommendations to enhance your bill and

put forward a process that all tribes can support. In closing, Mr.

Chairman and members of the committee, Indian tribes are in support of settling the trust. But the Indians have to be involved in

that process. If they are involved in that process, we can begin to

trust that this will be a fair process. Without the Indian involvement, that trust of this process will not be there.

Thank you for giving me a brief opportunity to testify. I look forward to answering questions afterwards. I would ask that my

statement be included in the record in its entirety.

Thank you.

The CHAIRMAN. Without objection, so ordered.

[Prepared statement of Tex Hall appears in appendix.]

The CHAIRMAN. Thank you, Tex.

I was reflecting in my own mind while you were speaking about

how much in the past history that American Indians have been involved in the process. The answer is about that much. Just darn

near nothing. You know it, and I know it, too.

This bill was not meant to be a quick fix. We started talking

about mediation over 1 year ago with anybody who would listen,

including the NCAI, by the way. It is meant to be a vehicle and

a place holder to prevent something from happening through the

appropriations process that Indian people are not going to like.

Senator Inouye and I, and most of the committee members, have

worked just as hard as we can to try to find a solution on this. The

bottom line is that Congress is losing its patience. I say that from

a generic standpoint. There are a number of our colleagues who are

just fed up with it, tired of it, and want to settle it through putting
34

more riders on the appropriations bill. We are trying to not let that

happen.

But we cannot stop it, very frankly. We cannot stop it unless we

get some help from both Interior and the plaintiffs. We cannot just

dig in and say, ‘‘I am not going to move. I will not do it. They are

wrong. The other side is wrong. We are supposed to get this much

money.’’ The other one is saying, ‘‘You are not supposed to get anywhere near that.’’

We have to find a solution, or it is just simply going to be taken

away from us. That is my personal view on it. I would hope that

you, as John Echohawk and James Cason have already said, that

you will also be committed to try to find a solution to this thing.

This is not an end bill. It is a beginning. It is a vehicle, as I said.

But we have to do something. The way I figure it, we have about

1 year, or we are going to be in deep trouble.

We will go on now with Fred Matt.

STATEMENT OF FRED MATT, CHAIRMAN, CONFEDERATED SALISH AND KOOTENAI TRIBES, PABLO, MT, ACCOMPANIED BY

BRIAN UPTON, LEGAL DEPARTMENT, CONFEDERATED SALISH AND KOOTENAI TRIBES, PABLO, MT; AND GEORGE WATERS

Mr. MATT. Thank you, Chairman Campbell and members of this

Committee. My name is Fred Matt. I am the Chairman for the

Council of the Confederated Salish and Kootenai Tribes. With me

today I have a member of our Legal Department, Brian Upton, and

George Waters.

Thank you for the opportunity to provide this committee with

views of the Confederated Salish and Kootenai Tribes. I bring you

greetings from God’s country. As you have heard me say many

times, when you are in Western Montana on a reservation, and you

pray to the Creator in the evening, it is a local call. [Laughter.]

So I bring you greetings from Montana.

The CHAIRMAN. That same sun before it gets to you comes over

our reservation in Lame Deer. I just wanted you to know that.

[Laughter.]

Mr. MATT. I knew you would have a comeback. Thank you.

I will summarize my written testimony. I also want to point out

that the version that is on the table is not our final version. We

were still making revisions as I came here yesterday on the plane.

I will try to be brief. I know this is an important hearing. Once

again, thank you for this opportunity.

The Salish and Kootenai Tribes have been very active in the area

of trust funds management. We have participated in many intertribal discussions on how to best resolve the problems with the

Federal management of the trust funds. We have also taken a more

direct approach. We manage our own financial trust services program. We can report to you that our tribal government and tribal

members alike are very happy with our experience in taking over

administration of these Federal trust functions.

Due to this experience, we have an unique insight into the trust

funds management issue since we can view it from the perspectives

of both the account manager and the account holders. As the managers of these accounts, we appreciate the complexities in resolving
35

the accounting issues. As an account holder, we know as well as

anyone that Federal mismanagement of the trust funds has long

worked great injustices to the many tribal and individual Indian

beneficiaries. These injustices would not have been tolerated had

they occurred in any other segment of America’s society. I know

many of you have mentioned those same thoughts.

As you are aware, the filing of the Cobell litigation has resulted

in the trust funds mismanagement issue receiving the attention

that is long deserved. Unfortunately, that litigation was filed over

seven years ago, but it was only last month that an initial decision

was rendered by the Federal District Court.

We agree with you, Senator Campbell, in your introductory remarks accompanying S. 1770, that the litigation will take many

more years. I believe it is both appropriate and productive for Congress to try its hand at fixing this situation. We, too, oppose spending $9 billion doing an historical accounting. If Congress has that kind of money, it would be better going

toward a compensation fund, or it could be better spent on tribal

land consolidation. Consolidation would help alleviate the problems

associated with fractionations of lands.

As this committee knows, fractionation creates trust fund accounting nightmares. I am truly concerned about helping our account holders. I am particularly concerned about our elders who

may not live to see the end of this lawsuit.

The Salish and Kootenai Tribes oppose the concept of a receiver

being appointed to manage Indian trust funds. We are glad to see

that S. 1770 does not include this misguided proposal. A receiver

may ultimately demand control over trust resources that generate

income into IIM accounts.

As a self-governance tribe, we are the manager of trust resources

on our reservation. Creation of a receiver would be a step backwards. It also would have shown little regard for tribal governments in our pivotal role in resource management on our reservation.

We are also concerned about the potential conflict between the

creation of the new trust standards for the rights of the tribes to

manage resources. The Confederated Salish and Kootenai Tribes

are proud of our system and of trust asset management. We are

proud of meeting high standards. However, we urge Congress to

keep an eye on the development of these new standards.

The reason self-governance works is that it allows tribal governments to keep flexibility while still adhering to Federal standards.

We must retain this flexibility even if new standards are adopted.

A few days ago, Chairman Campbell, you introduced S. 1770.

Our tribal staff and tribal council are still in the process of reviewing this bill. But we generally think that the legislation is creating

a settlement mechanism that can work. The bill would ensure a determination is arrived at in a reasonable amount of time so that

individuals could have their trust account settled and receive their

full payment.

The bill includes an option to remain in the class action lawsuit,

but it does make me wonder when we will be able to finally put

this case behind us. A reason for introducing this bill is to address

the problems and move forward on this issue. That will not happen
36

if a large number of individuals in the Cobell class decide to remain in the lawsuit.

I believe it is absolutely critical that the plaintiffs are able to access the judgment fund. I believe the bill has been drafted to protect this access. However, there is reason to doubt that the current

bill will be signed into law if the United States still retains the liability of the Cobell class action. This committee may want to consider whether the bill should settle the suit in finality.

A concern that I have, and one which I am hearing from other

tribes in Montana is: Where will the money come from to fund S.

1770? Will it come from the BIA’s budget and, therefore, out of the

services that are funded to tribes? The bill would authorize $40

million. The money of this bill must not come from programs funding tribal governments. We ask you to work with the Budget Committee to help resolve this concern.

It is important to remember that tribes need to be part of the

solution, as many have said, to this problem. Tribal governments,

like my own, can help to prevent future problems. We are the closest to the tribal beneficiaries. We have the strongest motivation to

properly handle these monies for our constituents. This is why we

pressed for inclusion of a trust fund demonstration project for fiscal

year 2004 in the Interior’s appropriations bill. This project ensures

our ability to continue our effective management without being impaired by any reorganization of trust functions within the Department of the Interior.

Over the last decade a great deal of energy and resources has

gone into trust fund management issues. I welcome Congressional

efforts to bring proper relief to individual Indian account holders.

S. 1770 appears to be a good faith effort by Congress to resolve the

problems at hand. S. 1770 and the recent House Resources Committee oversight hearing demonstrates that Congress is not content

to sit on its hands and have the issue dealt with by the courts and

the Federal agencies. I believe this engagement by Congress, with

active participation of the tribal governments, can be productive in

reaching the solution to a long-standing problem. S. 1770 is an important step in that direction.

Once again, Mr. Chairman, I thank you for the opportunity to

provide testimony. I would ask that my statement be included in

the record in its entirety.

Thank you.

The CHAIRMAN. Without objection, so ordered.

[Prepared statement of Fred Matt appears in appendix.]

The CHAIRMAN. Thank you.

You asked a rhetorical question. Where would the $40 million

come from that is authorized in this bill? You have to ask the same

question: Where is the $10 billion going to come from if we let this

thing go on for another 8 or 10 years? There is always that worry

on our behalf that someone around here may say, ‘‘Well, it ought

to come out of existing Indian programs.’’ None of us want that.

When you are facing a $400-billion deficit, believe me, everything

is a tug-of-war around here for money. That deficit is apparently

is going to be here for the next few years, too.

Let us go on now to Jim Gray, who will be our last speaker.
37

STATEMENT OF JIM GRAY, PRINCIPAL CHIEF, OSAGE TRIBAL

COUNCIL, PAWHUSKA, OK

Mr. GRAY. Thank you, Chairman Campbell. I appreciate the opportunity to speak to the committee this day.

I would like to present the views of the Osage Tribe. I will briefly

go over some of my comments in regard to the interest of time.

Most of my comments are in my written testimony that I have submitted.

We agree with the sponsors of S. 1770 that it is in the best interest of Indian account holders and the United States to have a voluntary alternative claims resolution process that will lead to a full,

fair, and final settlement of existing and potential Indian money

account claims.

We are concerned about provisions in this bill, particularly the

definition of accounting and claim contained in section 3 of the bill.

We believe that the process should be established by S. 1770 as

fundamentally fair. It does not, however, take into account the

unique situation of the Osage Tribe and its hybrid trust fund

scheme. Any fair resolution of the trust fund situation should deal

specifically with the Osage. We would like to work with the committee to address the concerns discussed in my testimony.

In the legislation we also have serious misgivings on the definition of accounting. We believe an IIM account holder should have

enough information to make an informed decision about whether to

accept an amount the Task Force recommends. Based on the particularly vague standards of both (a) and (b) of this definition, accounting may be an inaccurate confusing name for a determination.

We recommend that this legislation either adopt common law accounting standards or call the determination something other than

an accounting, and require the Task Force to make clear the deficiencies, if any, in coming to a determination. IIM account holders

have a legal right to a full accounting. This legislation should ensure that they are not confused or deceived by a determination.

We are also concerned that the definition of claim could create

particular problems for the Osage Tribe. The management and the

distribution of Osage trust funds are unique. In 1906, Congress directed the Secretary of the Interior to create a roll of all living

Osages through July 1907. All persons on that roll received allotments of Osage reservation lands and a pro rated share of the

Osage mineral estate.

These pro rated shares have been passed along over the years to

Indians and non–Indians and have come to be known as head

rights or the rights to receive quarterly distributions of funds derived from the Osage mineral estate. Only Osages with head rights

have political rights to participate in Osage government through

voting or running for elective office. Their voting powers are equal

to their head right fraction.

The Osage mineral estate continues to be held in trust by the

United States for the Osage Tribe. Funds derived from the Osage

mineral estate are placed into a tribal trusts account in the name

of the Osage Tribe. The tribal council can draw up to $1 million

annually from the minerals’ income for purposes of council and

mineral estate administration. Each quarter the balance of the

funds in the Osage tribal account is distributed to the head right
38

holders in accordance with their head rights share. A few head

right holders have more than one head right, while most have a

fraction.

The Department of the Interior has established three categories

of head right holders: Osage, non-Osage Indian, and non-Indian.

Osage and non-Osage Indians with head rights have Indian money

accounts that funds from the mineral estate are deposited into. The

non-Indians do not have an IIM account, but receive a check every

quarter.

Mr. Chairman, the Osage trust fund is an unique hybrid in

which funds common to a tribal account. Congress has called these

funds tribal funds in statutes. The tribe has rights to these funds.

The Indian head right holders receive distributions into IIM accounts, while non-Indian head right holders get a check.

The U.S. Court of Claims recently ruled that the Osage Tribe has

standing to represent the right of the head right holders in litigation involving Federal mismanagement of Osage trust funds. Furthermore, a Federal statute makes clear that the Osage Tribe is

the appropriate entity to bring claims against the United States.

Thus, the Osage Tribe and its head right holders do not comfortably fit into the otherwise simple dichotomy of tribal claims and

individual claims.

We are concerned that the definition of claim in section 3 of the

bill is overly broad as it includes any duty that pertains in any way

to the IIM account. Such broad terms subjects the definition to

varying degrees of interpretations. The definition includes more

than an accounting, and appears to include activities that occur

prior to the time the money is deposited into the IIM account.

We are concerned that this definition may result in harm to

Osage tribal claims brought in the Court of Federal Claims, or one

we plan to bring in Federal District Court. Even though the stated

intent of the bill is to resolve individual Indian account claims, Indian head right holders would appear to meet the qualifications as

eligible individuals under S. 1770. Head right holders claims could

subsume the Osage Tribe’s existing claims contrary to the intent of

the tribe to represent the head right holders. Therefore, we would

like to work with the committee to amend this definition.

Thank you for the opportunity to testify today. I would ask that

my statement be included in the record in its entirety.

Thank you.

The CHAIRMAN. Without objection, so ordered.

[Prepared statement of Jim Gray appears in appendix.]

The CHAIRMAN. Thank you.

You brought up another wrinkle, of course, in this whole big picture. It may be that the Osage may be better off doing their own

accounting somehow. I do not know. But we will certainly work

with you.

Let me ask a question or two of each of you. First of all, if you

remember in your discussion with John Echohawk, the number of

500,000 plaintiffs came up. Let me ask all three of you.

The national average for life expectancy in America now is 76.5

years—getting older, living longer, and better health. There are all

kinds of reasons for that, but not for Indians. You know as well as
39

I do that the national average for Indians is 60.6 years, living 16

years shorter life than non-Indians.

What I would ask you is this. Have you met any people now who

are plaintiffs who are in their sixties? Tex?

Mr. HALL. Yes; I have, on my reservation and on several other

reservations, Senator Campbell. But your point is well taken.

The CHAIRMAN. Do you see what I am getting at?

Mr. HALL. I believe they need to be prioritized in the settlement

process.

The CHAIRMAN. Sure.

Mr. HALL. It is also culturally appropriate that the elders come

first. They are our first teachers. They do not have that much time

to live.

The CHAIRMAN. You are exactly right. They do not have that

much time. For all the reasons that you know as well as I do—poor

health, diet, and all kinds of different problems. But the bottomline

is if this thing goes on another 10 years, most of those American

Indian people that are now plaintiffs that are 65, I think a very

high percentage of them will not be around to even get the benefits

that they deserve and that we owe to them.

I guess that is the reason that I keep coming back to the question: How much longer do we want to go? We have to move something forward.

Let me ask all three of you, but Tex, you first. When we are talking about a mediator or mediating, would it be more important, or

equally important to do mediating over methodology or over accounting, or both?

Mr. HALL. I would say probably both, Mr. Chairman. We could

spend a long time talking about the methodology. The accounting

probably; I would say yes. As was mentioned, the common law

standard needs to apply. We could spend time disagreeing on the

type of accounting. But the priority would be methodology.

The CHAIRMAN. I think we have been disagreeing for 8 years.

That would not be a surprise.

Mr. HALL. That is correct.

The CHAIRMAN. Mr. Matt.

Mr. MATT. I would just echo what President Hall has mentioned.

I think the methodology is probably the first step in that process.

I do not think you are ever going to have a complete accounting.

The CHAIRMAN. When we are talking about accounting, for instance, do you think that we should try to arrive through some mediating efforts a total or global settlement figure up front and that

money would later be distributed, or should the process focus on an

account by account mediation or something in between?

Mr. MATT. I do not have a good feel for that. I know those are

some of the things that I think we need to continuously try to

evaluate and see what the best process would be. But I do believe

that that question can be answered and we can go forward.

The CHAIRMAN. Tex.

Mr. HALL. I would definitely say, Mr. Chairman, that a figure should be put in place. If it is $13 billion—we have to have a starting point. Anybody has ownership in any kind of account, they

want to know what type of money is on the table. So I think we

need to have that.
40

The CHAIRMAN. It might not be what some people expect, how- ever, when you have a disparity of $175 billion on one side and $10

billion on the other. I agree.

Mr. GRAY. Senator, I think what we need to look at in terms of

any mediation before we come to the table, we should not preclude

any particular process of methodology for discussion before we sit.

I think by arbitrarily selecting one particular methodology and saying, ‘‘Okay, let us mediate,’’ I think is undermining to certain positions that may be more acceptable in other avenues.

I think forensic accounting certainly would be a good method to

be able to reconstruct some of the missing documents. Even

through my understanding of what a statistical sample is, it does

not take into account many of the missing documents that we all

know are unrecoverable. In many cases, historically you see $100

leases here and $100 leases there. In the Osage case, in the 1920’s,

it was $1a million here and $1 million there.

So any kind of gap that does not take the forensic account activity of the oil and gas activity in the Osage, would certainly undermine our efforts to achieve a fair settlement.

The CHAIRMAN. I see. Fred, as well as you have the microphone

there, did you attend Chairman Pombo’s hearing in Billings last

Saturday.

Mr. MATT. Yes; I did.

The CHAIRMAN. What was the tone of that hearing from the Indian people who spoke?

Mr. MATT. I would say that you heard some of the same concerns

at that hearing as we are hearing today. Some of the things are

very apparent that were at least seeming to come to some sort of

an agreement that we need to get this process in place to where

we can have a settlement or we can arrive at some sort of a process. I think the same thing was said there.

The CHAIRMAN. I understand, Chairman Matt, that you are

record of opposing the idea of a receiver to take over the functions

of the BIA or the Department of the Interior; is that correct.

Mr. MATT. Yes, sir; I was hoping you might ask that. If you just

look at what you hear in the media, and if you look at where this

issue has gone, you would also get the impression that we are back

in the 1880’s. But there are a lot of tribes like ours that are out

there that really have, through the Self Governance Act and other

means, taken over these trust programs and have done an excellent

job.

Indian people are humble in nature. I do not want to sound like

we are bragging or that we are better than any other tribe, but we

have done things on our reservation that I think really benefit our

beneficiaries, the tribal members there. What we do not want to

see is other layers of government added to this mix because of

some court order. We feel as though we are a model program. We

would like to show that off, so to speak, to Indian country. I think

it does speak to what we can do if we have the chance to do it ourselves. That is part of the problem. We have had our Big Brother,

BIA, watching over us.

The CHAIRMAN. I understand your tribe, too, has really set a fine

progressive example of trying to reconsolidate the fractionated

lands on your reservation. Many people say that the problem that
41

we have with fractionated lands makes this problem of trust even

worse.

Mr. MATT. It is one of the big problems.

The CHAIRMAN. Jim, you pointed out some of the complications

that the Osage have special to that tribe in dealing with the settlement. Would the Osage Tribe prefer to be left out of the settlement

legislation altogether and to deal with it some other way?

Mr. GRAY. Well, I think the Osages would be open to having cemented with the staff to see if there might be some amenable language that might protect the Osage’s interest in all this. Short of

that, then maybe that would be the final option.

I just appreciate the fact that you are open to hearing our point

of view on this. We are in an unique situation here.

The CHAIRMAN. Are the head right owners or at least some of the

head right owners included as a member of the Cobell plaintiffs

class action suit?

Mr. GRAY. I think to a degree they are. I think that while the

definition of the right of the Osage tribal council to represent the

interests of the shareholders has been worked out in the Federal

Court of Claims as the legal entity to represent the interest of the

tribe. You can understand my hesitancy to fully answer that question because the litigation is ongoing.

With respect to the Cobell plaintiffs, their arguments, their discussion, and their claims are in general and in theory the same direction we believe this discussion should go. Where there are differences of opinion pertaining to the Osage, I think we have the

right to be able to protect those interests whenever we can. With

respect to the actual Cobell case, once the funds are distributed to

the IIM account holders, I think there is an interest there that the

Cobell people can represent the interest of those individuals of our

tribe.

The CHAIRMAN. Well, hopefully you will also work with the committee staff on trying to make sure that whatever we do that there

is some language in there that protects the Osage people and the

Osage Tribe.

I have no further questions. Chief Gray, if you would give my

best to the Imholas, the Pratts, the Good Eagles, and all my old

friends there that I use to pow wow with, I would appreciate that.

Mr. GRAY. I will do that.

The CHAIRMAN. Tex, the same to you. Ed and Linda Lone Fighter

are friends from years and years back. I never see them anymore.

But give my best to them, if you will.

Mr. HALL. He is back in the BIA again.

The CHAIRMAN. Oh, he is. Well, tell him hello.

I am sure that Senator Inouye will have questions to ask of each

of you and that will be inserted in the record at this point.

Without objection, so ordered.

With that, we will keep the record open for 2 weeks for any further comments.

Without objection, so ordered.
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I look forward to taking everybody up on the offer to work with

our staff to try to get some resolution to this very difficult problem

so that we are not dealing with the same thing 5 more years from

now.

With that, the committee stands adjourned.

[Whereupon, at 12:05 p.m., the committee was adjourned, to reconvene at the call of the Chair.]
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APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM ARIZONA

Mr. Chairman, thank you for scheduling today’s hearing as part of this committee’s continuing oversight on issues associated with the Federal Government’s management of individual and tribal trust funds accounts.

Today’s hearing addresses a voluntary, alternative claims resolution process to

reach settlement of the class action lawsuit known as Cobell v. Norton.

As I have stated before, history and the Cobell case demonstrate that the Department of the Interior has flagrantly failed to fulfill its trust duties. Hundreds of millions of dollars have been spent on failed efforts to either identify reconciliation efforts, or have been spent on consultants to evaluate the extent of the Federal Government’s liability for mismanagement. Despite these efforts, we still have not

reached a reasonable solution.

However, the topic today addresses a potential settlement solution that is only a

partial answer to a larger problem: It is merely one aspect of trust reform.

My colleagues, Senators Daschle and Johnson, and Representatives Udall and Rahall in the House, and I previously introduced ‘‘Indian Trust Asset and Trust Fund

Management and Reform Act of 2003.’’ Our bill, S. 175, would revise trust reform

legislation to address the tribes, highest priority areas to improve trust funds and

trust assets management. Our bill still has not received a hearing.

I urge the committee to consider our bill as part of the overall need for legislative

reforms and to schedule a hearing as soon as possible.

Mr. Chairman, I take no position at this point on the legislation being discussed

today until I receive input from Native American constituents and conduct a thorough review of the proposed legislation. I look forward to what the committee has

to say.

I commend the committee for its continued efforts and focus on this critical issue.
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